By
Chimamanda U. Martha
April 19th, 2024
Towards the end of last week, Binance, a leading cryptocurrency exchange in the world, announced that it would be blocking its US users. The move was manifested by a change in the exchange’s terms of service.
The change picked 28 other countries that its users will not be able to access Binance.com. Among countries restricted from using Binance.com include those that have economic sanctions.
Prohibition of Use Clause
As per the ‘Prohibition of use’ clause on the updated terms of service, Binance notes:
“By accessing and using the Services, you represent and warrant that you are not on any trade or economic lists such as the UN Security Council Sanctions list, … or placed on the US Commerce Department’s ‘Denied Persons List.’ Binance is unable to provide services to any US persons. Binance maintains to select its markets and jurisdictions to operate and may restrict or deny the Services in certain countries at its discretion.”
It’s a shock that the exchange is closing its doors for users in the United States, considering that approximately 20 percent of its users originate from the US. For example, in the past six months, more than 40 million users from the United States visited Binance.com. The US was followed by India, Japan, Germany, and Turkey.
There’s a Way Around the Restriction, But not for Everyone
While the news are likely to dampen the crypto mood in the US market, US residents may still have a way to bypass the blockage; by using a virtual private network (VPN). Unfortunately, only those that are not verified can successfully use a VPN. However, Binance users who are not verified can only withdraw a maximum of 2 Bitcoins.
Changpeng Zhao (CZ), Binance’s CEO, had earlier anticipated the restrictions. But, the CEO expressed optimism saying that “some short terms pains may be necessary for long term goals.”
From Centralized to Decentralized, the SEC Gets Involved
With the exchange shifting from being centralized to decentralized, the United States Securities and Exchange Commission (SEC) must be involved. To prevent being caught in a regulatory standoff with the SEC, Binance announced that they would geo-fence their decentralized exchange to wade off users from the US among other countries such as Central Africa Republic, Cuba, Ukraine, Libya, Liberia, Venezuela, Zimbabwe, Iraq, Iran, Lebanon, among others.
After Coburn, CZ May Be Next
CZ possibly fears being arrested following what happened to Zachary Coburn. Coburn, the CEO of EtherDelta, a decentralized crypto platform, was charged by the US Securities and Exchange Commission for running an unregistered crypto platform. As per the SEC, EtherDelta has handled over 3.6 million orders which included tokens that the SEC classifies as securities.
A Twitter user, veltre_nick, while contributing to the news regarding Coburn’s predicaments, noted:
“These are just the SEC charges. The money laundering charges for being an unlicensed money transmitter come next. Then there will be more. And every DEX. DEX’s are money laundering machines.”
If the SEC holds the same views as veltre_nick, then CZ may have just avoided being charged or even an arrest. Luckily, another Twitter user has a solution, “DEX makers tip: don’t start in the USA.”